The process of assigning projects to a department or person within the company rather than a third-party outsider.
How Insourcing Works
Insourcing refers to a project or business function that the company could have outsourced to another place to complete but chose to complete the work themselves. There are ample benefits associated with insourcing. Insourcing allows the company to be the primary decision-maker over projects, and the company can move more precisely and quickly with the related tasks.
In the past, most companies in the world chose to outsource projects rather than insource. The main reason for outsourcing is to search for labor and or materials that are relatively cheaper. Companies found that outsourcing reduced their financial costs, but they missed out on the implicit costs associated with taking work away from their company.
In some instances, insourcing can lead to high expenses for the company. The decision to insource depends on allocating resources to set tasks. Some of the functions that organizations outsource include manufacturing, human resource management, marketing, and customer service. Choosing to insource these various functions can have immense benefits to a company.
Example of Insourcing
A large biscuit company, Butter My Biscuits, wants to start a new brand of biscuits. One of its strategies to promote the new brand is to use social media. The executives know that their marketing department has done well in the past with product campaigns, but this would be Butter My Biscuits' first extensive social media campaign. The executives now have to decide whether to insource the project to its marketing department or outsource to a hired marketing agency.
Before deciding to outsource the social media campaign, the marketing department is briefed and asked to create a pitch of the possible nationwide promotional campaign using only social media. After reviewing the marketing department's pitch, the executives decide to insource and allow the campaign to be launched from within the company.
Deciding to insource the social media campaign saved Butter My Biscuits from finding and hiring an outside marketing agency. They were also able to boost company morale by insourcing to their capable marketing department. If they had outsourced the project, they would have spent extra time and money and hurt their employees had they taken their business elsewhere.
Significance of Insourcing
There are numerous benefits related to insourcing projects within organizations. Some of the benefits include greater flexibility and agility in the projects. Companies that insource can scale up or down their projects quickly when needed to meet various demands. Another great benefit is that with insourcing, there is quality assurance. The organizations are sure they have qualified staff that can lead to quality products.
Insourcing leads to knowledge sharing and collaboration amongst employees. Insourcing can create a more productive environment full of trust; trusting employees to complete work that could have been outsourced shows employees that they are worth doing all tasks. With insourcing, business organizations can control any project's skill sets and critical functions; such functions include communication.